Elizabeth Warren, U.S. Senator of Massachusetts, introduced legislation in the Senate on Tuesday, which addressed two key aspects of her public policy. These include the aim to lower student loan debt and the attempt to increase tax revenue from the top 0.3 percent of Americans earning extremely high incomes.
Elizabeth Warren, a Democrat from Massachusetts, is steadfast in the introduction of her bill, which would allow many people harboring student loan debt to refinance their past loans at rates lower than their past interest rates. This would work in nearly the same way as someone who would refinance a car loan or one’s home mortgage. As students today are able to borrow at lower interest rates, Warren feels that these current rates should be applied to those who are still paying off their debt as well.
According to Warren, people have the ability to refinance their homes and debt from loans given to businesses during times of decreased interest rates. Considered a wise move for both businesses and consumers, student loan borrowers in the U.S. are currently not allowed to try this under nearly all of the available programs. Warren states that the bill would improve the situation, enabling a student to refinance his or her student loan to the lower interest rates that currently exist for new borrowers.
The Buffet Rule, named after billionaire Warren Buffet, is aimed at increasing taxes on the wealthy in order to ease the tax burden for middle class income earners. Buffet stated in 2011 that he believed it was wrong that extremely wealthy people, himself included, payed less in federal taxes per income than his own secretary did. The rule would then implement a 30 percent tax rate for 0.3 percent of taxpayers in the highest income bracket. However, when Senator Harry Reid from Nevada tried to push the rule through congress in 2011, the rule was immediately shot down by Republican constituents.
Senator Elizabeth Warren’s bill builds upon the Buffet Rule, which would ease student loan debt stress for the over 40 million U.S. students who struggle with unemployment, defaulting on their loans, as well as having to live at home with their parents. Warren explains that by letting students refinance their loans, there would be more available personal funds for them to put back in the economy. As a result, the economy would experience a high increase in consumer spending. With one in seven recent graduates defaulting on their loans within the first three years after graduating, Warren states how the current system has damaged young adults and is utterly unsuccessful.
Again, Elizabeth Warren states that if congress introduces lower interest rates on student loan debt, many of the 40 million students facing loan debt could save hundreds, if not thousands, per every month. This money, back in the hands of the population, could rebuild and change the current system in order to ensure a strengthened economy in the near future.
In a study by the Government Accountability Office, the U.S. Government took in over $66 billion from interest on student loans alone between 2007 and 2012, which Elizabeth Warren deplored as being completely insane. However, the loss of $66 billion would immediately cost the U.S. Government billions of dollars, which the federal budget would not be able to support under the current system.
However, Senator Warren explains that the Buffet Rule would ease a lot of financial stress on the economy. Again, as Warren Buffet stated, he should not be taxed at a lower rate than his secretary. While Republicans in the U.S. Senate shot down the 2012 rule, Buffet states that this would have made the significant difference necessary to heal the economy, while showing that the United States values its citizens after all.
As midterm elections for U.S. congress approach in the fall, Senator Elizabeth Warren introduces the bill to lower student loan debt interest rates at a convenient timing. If Republicans vote against the bill that Warren introduces, it will show that they are against refinancing student loan debt by refusing to ask America’s wealthiest citizens to contribute back to the economy. In other words, their actions will show whether they side with America’s wealthiest individuals or with the 40 million hardworking American students struggling to make ends meet, while facing astronomical interest rates on loans.
By Scott Gaudinier